Visualizing The Year-End Squeezapalooza

Tyler Durden's picture

Since the beginning of December, the Russell 2000's most-shorted index has outperformed the Russell 2000 by a magnicently squeezed 500bps! How much longer can it last? No idea but once again the worst becomes first in this topsy-turvy market.



Perhaps the rip into QE3 was the 'equilibrium' moment and we are reverting to that now - which suggests that the squeeze has fewer legs from here...


Charts: Bloomberg

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NotApplicable's picture


"How much longer can it last? No idea but once again the worst becomes first in this topsy-turvy market."

It was the best of times, it was the worst of times...

ptoemmes's picture

It's alwasy darkest before it goes pitch black.

Mr Lennon Hendrix's picture

Sorry bears, you've been Bernanke'd.

busted by the bailout's picture

Yes, but my question is with everyone expecting the fiscal cliff to be averted, the housing market improving, unenployment dropping, and the economy "slowly improving", why the hell did we need QE4???

It used to be that investors got scared when the Fed took unexpected / unjustified easing actions because they wondered "what does the Fed see in the data that we don't".  Now the economy and reality matter less and less with every QE.  It's just more liquidity, all the time, no matter what.  What the hell is he going to do now if the economy DOES slow down???

It's all gain and no pain!!!  Too bad those poor slobs in the depression didn't figure out the miracle of money printing.  All they needed was paper, instead they suffered for 10 years, and it still took WW2 to get them out of it!

LooseLee's picture

What are these, 'investors', that you speak of?

gwar5's picture

Whole economic system reminds me of "Runaway Train" with John Voight.  No brakes, no engineer at the wheel, just a runaway train with a sociopath and a death wish at the wheel, laughing about his final destination.





NotApplicable's picture

Along with this song.

"In the shuffling madness
Of the locomotive breath,
Runs the all-time loser,
Headlong to his death.
He feels the piston scraping --
Steam breaking on his brow --
Thank God, he stole the handle and
The train won't stop going --
No way to slow down."

flacon's picture

Give me absolute control over every living soul! Leonard Cohen sings it well...


slaughterer's picture

Bears are insane for staying short into $85b/m in flows plus Fed legerdemain tricks and Kevin Henry still at the desk selling VOL through thick and thin.  Plus it will take a very BAD 1Q earning sseason to put to rest the 2013 recovery myth being put forward by 95% of analysts.  Do you see David Kostin still plugging an ES 1250 EOY target?  Where are Faber and Bidermann nowadays?  Maybe with a few more AAPL downgrades (seems to work ihn AAPL's favor nowadays) the bears can get back on track. But I think it would be best to hibernate right now.   Nighty night.  Boehner wants to see his SPY calls pay good on quadruple witching.  

Mr Lennon Hendrix's picture


Bears are idealists.  Bears are on the same page as bulls. 

There is no bear market and there is no bull market because there is no market.

JustObserving's picture

Would you rather be a poor idealist or a rich pragmatist? 

Gold down $30 today for what?  

Do you think that the financial criminals in the US will ever be brought to justice?  

Think and act like a criminal to get rich.  When the markets are criminal, only the criminals prosper.

slaughterer's picture

Truth is seen in above post.  Join the criminals.  Forget the idealists.  

Dr Benway's picture

The danger with that approach is that many of those who think they have joined this criminal conspiracy are in reality just patsies and will be pawned

NotApplicable's picture

These days, you're either a front-runner or you're front ran.

MeanReversion's picture

Funny how this post, and almost certainly mine next, get downrated.  I've been a perennial bear on U.S. fundamentals, but you know what, I'm not going to fight the tape.  The stock market is trading on sentiment and to ignore the coin you can make with smart long strategies, is frankly, stupid.  The market will eventually turn but no point fighting the tape at this moment.  I've made a killing on SPY calls and spreads in December.  And when technicals turn bearish, I'll ride that wave down too.  Fundamentals don't matter any more.  Deal with it and make money.  30 year yield at 3% is bullish and intermarket relationships are very bullish right now and the Fed has given you a free put option.

NotApplicable's picture

You're going to be extremely surprised someday to discover that Benron's put is far from free, rehypothetically speaking. Pennies and bulldozers come to mind. The casino is not only rigged, but all of the exits are being sealed in advance of the upcoming arson.


(BTW, I did not junk you)

MeanReversion's picture

There is no free lunch obviously, and one day there will be a reckoning, but in the short term interim, if you have the biggest market manipulator in the world pushing you into risk assets with the express intent to inflate said risk assets, would you rather be long or short?

Of course, if fiscal cliff talks break down and there is no deal whatsoever, then there will likely be a meltdown, but that idealism would have had many people sitting on the sidelines while the market has ramped up recently.  Regardless of what your fundamental beliefs are, not taking up a short term opportunity to make money due to long term concerns I think is being farsighted.

Element's picture



"Fundamentals don't matter any more."


Fundamentals don't matter any more, until they matter more.


Fixed it

SheepDog-One's picture

Yea Slaughter thats why I dont even believe this story that 'shorts bears' powered the DOW etc from around 8,000 to 13,300....theres not that many rich dumbasses around that line up time after time to get screwed while markets rise on their backs 45%.

LooseLee's picture

If you're not part of the solution, you're part of the problem. Take a bow and CYA....

slaughterer's picture

As a bear, you have to ask yourself: can my capital base tolerate 3 months of successive overnight Fed-executed ES levitations and muppet-baiting bright-eyed MSM happy reports?

Can my AAPL short capital really tolerate a 10-15% swing upwards in AAPL without beign wiped out?

Is Japan really going to fall into the fiscal ocean?

Is Australia really going to suddenly collapse?

Is there really going to be a domino-sequence sovereign debt collapse in Europe?

Is the fiscal cliff really going to result in a plunge deeper than ES 1350?

Is Bernanke ever going to tighten?

GernB's picture

Yea, I think the fiscal cliff could result in a drop below 1350.

The problem is, right now, today, optimisim is extreeme. You can see it in these pages, where the majority concensus is the market goes up. I gaurentee everyone who thinks that way, and it seems to be an extreme majority right now, is either in the market already or won't be in the market at all. All this optimisim means there are no more pessimists left to sell to. I'd bet that over the next few days that spells a decline as people start to come down off of the high and the market reminds itself that there are risks still left on the table.

The problem with the fiscal cliff is the notion that a deal means a solution. Which you only have to remind yourself that the currentf fiscal clilff was the solution to the last crises, The point being that tax increases and spending cuts are the problem and the only way to avoid a recession is to avoid spending cuts and revenue increases. It's possible that's what well get for a deal. However, it's also possible that any deal willl be just another combination of spending cuts and revenue increases that is only marginally less recessionary than the current fiscal cliff. Kicking the can down the road with more debt is the only possible outcome that warrants a market ramp up. I think this is one of those buy the rumor, sell the news moments, because the new, even if it is a deal may cause a sell-off as investors realize the deal isn't going to fix anything.

LooseLee's picture

Is slaughterer ever going to have an intelligent insight? Doubtful; no soul inside...

max2205's picture

That's the problem. No one is short more than 10 min or a week. Then bammm

Martdin's picture

Gold is starting to look delicious.


NitneLiun's picture

It'll taste better at 157.

Lost Wages's picture

My stock portfolio is enlarged and engorged by the seductive gyrations of this market. My silver, not so much. I took advantage of the dip to get free shipping over at Silvertowne today.

Pharming's picture

I did the same thing!  I visited Provident Metals.  However, I believe I was placed on a watch list has a "Food and Survival" tab next to the metals.  :(

slaughterer's picture

Look at Russell 2000 and financials ROCKET today!  FAZ and TZA are getting slammed to the ER.  Same as during the beginning of the QE3 rally   Read the tea leaves. We are at the beginning of the Tepper "a lot" rally.  See you at ES 1565 in 2013.  

Squid Vicious's picture

are you the ghost of Robotarder past? 

LooseLee's picture

This MORON is a follower of CHARLATANS. Watch your back when TSHTF. Guys like me will be HUNTING Guys like you...

pebblewriter's picture

When QE3 was announced 9/13, SPX closed up 23.  Only 5 the next day.  That was the top.

JustObserving's picture

Tyler, why do you waste your breath on this market?  This is a completely manipulated "market" which is not amenable to analysis.

If you are in any investment that Bernanke does not approve, it will be manipulated down.  US debts and liabilities grow $23 billion a day with silver (total bullion available in world about $32 billion) going down everyday.  

The markets will only go higher since the Fed wants them higher to show the resilience of "free" US markets.

If you make rational choices in manipulated markets, you will lose your shirt.  Just drink the Fed's koolaid and get rich.



pragmatic hobo's picture

It's not the market that's manipulated but it's the mindset of traders, investors etc that are manipulated. I think it's called expectation management.

NotApplicable's picture

A better pragmatist would recognize those options are not mutually exclusive, and to hold them as such, is to be manipulated. ;)

LooseLee's picture

If you're not part of the solution, you're part of the problem. Take a bow and CYA....

Quinvarius's picture


but the reward is now skewed to gold.

dvsteenk's picture

could it be manipulators' opex party this friday?

looks like their targets have to be defended and squeezed to maximum...

Boilermaker's picture

I think you just might be onto something there....just maybe.

ekm's picture

Pure and simple INSECT TRAP. Nothing else.

chump666's picture

Thankfully Marketwatch bulls don't manage my portfolio, they would have lost me a chunk in Nov and now are scrambling into the HFT death trap - with everyone else. Reflation trade my a-hole. Why is gold/copper being blown to sh*t and the DXY is slightly supported?

ASX200 squeeze while Gold/commodities sans oil get slammed???

Wow, this 2013 market flush will be beyond brutal.

pebblewriter's picture

"Wow, this 2013 market flush will be beyond brutal."

If it waits that long...